The latest news for the wine industry has a bit of a bitter aftertaste.

In 2025, wine sales in the U.S. hit $115 billion, which was up 3 percent over 2024 and $40 billion more than 2018, according to the new 2026 BMO Wine Market Report. The market has never been more valuable. Seems like amazing news, right? Well, the Bank of Montreal’s wine deep-dive shows an industry in a massive transition period. Because while total revenue is up, the volume of wine sold is down.

“Wine is not alone as the entire beverage alcohol sector continues to suffer a demand problem exacerbated by layoffs, rising fuel prices, a new generation of anti-alcohol rhetoric, and political and economic instability,” the authors write in their report.

The wine market has been buoyed by affluent buyers willing to pay more per bottle. However, the cost of wine is a double-edged sword. While premium labels and their requisite price tags have kept total revenue for the industry up, consumers in general are drinking less, and this new report says the cost of wine relative to other alcoholic beverages is hurting sales volume overall. The report also cites a generational shift away from wine, with millennials not taking to fermented grape juice as much as boomers. And with boomers themselves drinking less wine, the industry is contending with a shrinking pool of customers.

The pain for the wine business has been felt most in the lower end of the market, and signs have kept popping up in the wake of the pandemic. In Washington State, for instance, Ste. Michelle Wine Estates announced layoffs a few years ago and told winegrowers it would purchase 40 percent fewer grapes, sending a chill through the region. And last fall, the California Association of Winegrape Growers reported that 40,000 acres of vines had been ripped out in the span of a year because there was no point in turning those grapes into wine. Many of those removed vines would have been turned into bulk wine to fill cheap bottles. California’s wine harvest, in turn, was paltry. Only 2.6 tons of grapes were picked in the Golden State, the smallest haul this century and down from the 4.3 million tons picked in 2018.

“By 2024, it was painfully apparent to those in the wine business that there were too many vines producing too many grapes for weakening wine demand, and a reset was needed,” the authors wrote in their report. “More than 30 percent of all wineries are looking to sell off their estate product as bulk and 11 percent are holding bottled, but unlabeled wine, they may be forced to sell as ‘shiners’ that can be labeled by another winery. 10 percent of all wineries are considering a ‘major’ change such as selling their winery, vineyards or discontinuing a brand.”

And yet it’s not all doom and gloom for winemakers, as smaller operations are finding an audience. “A larger share of smaller wineries are finding success creating private label brands, with nearly 20 percent of wineries producing fewer than 5,000 cases now active in this growing sector of the market,” the authors write. It’s further proof that while there may be fewer drinkers, the ones still around are willing to pay for quality.